Legitimate MLMs charge a relatively small fee for their starter kits, sell products that are purchased by the ultimate user and normally offer reps refunds for unsold items.

FORBES: Can You Really Make Money In Direct Sales?

While MLMs and pyramid schemes both use customers as distributors for their products, the key difference is that pyramid schemes sell token items, something that nobody actually wants.

FORBES: Herbalife A Target? Absolutely

Herbalife and other MLMs, such as NuSkin and Usana, however, sell products that people do buy, and while there may be some moral qualms about MLMs and pyramid schemes, US courts have ruled that MLMs are completely legal.

FORBES: Herbalife A Target? Absolutely